Dennis Kelleher, the CEO of the nonprofit Better Markets, has strongly advised the U.S. Securities and Exchange Commission (SEC) against sanctioning a spot Bitcoin exchange-traded fund (ETF). He argues that such a move would contradict the fundamental principles of the regulatory agency.
In a letter to SEC secretary Vanessa Countryman dated January 5, Kelleher warned of the significant risks to investors that could arise from approving a spot Bitcoin ETF:
“We rarely submit a supplemental comment letter, but we felt compelled to do so in this case, as approving the pending rule change for a spot Bitcoin ETF could lead to substantial investor harm, a mistake that would be both grave and historic,” Kelleher wrote. He expressed concerns about potential fraud risks, which he believes are prevalent in the cryptocurrency industry. “Sanctioning these spot Bitcoin ETPs would not only expose investors to a fraud-ridden market but would also give the crypto industry a false sense of legitimacy as being government-approved,” he added.
Cointelegraph recently highlighted that over 324,000 cryptocurrency users were victims of phishing scams in 2023, resulting in approximately $295 million in digital assets being stolen.
Kelleher’s stance, however, has been met with skepticism from some in the crypto community. Bloomberg ETF analyst James Seyffart criticized Kelleher’s letter on social media platform X (formerly Twitter), emphasizing the extensive efforts by asset management firms in their ETF applications. Fox Business journalist Eleanor Terrett, in another X post, recalled Kelleher’s previous critical comments about cryptocurrency, quoting him as saying, “It’s worse than a fantasy; it’s a fraud on the public,” a statement he made during a May 2023 interview with the Institute for New Economic Thinking.
In related developments, 11 applicants for spot Bitcoin ETFs filed 19b-4 amendment forms by the end of the business day on January 5. These forms are crucial in the SEC’s approval process, but the completion of S-1 documents is necessary for U.S. exchanges to start listing shares of investment securities directly tied to cryptocurrencies.
Speculation is rife that the SEC might grant final approval for the spot Bitcoin ETFs before January 10, which is the deadline for a joint offering from ARK Invest and 21Shares.
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